Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate will be at least two points under your current rate? That might have been valid years ago, but as refinancing has been costing less in recent years, it is never the wrong time to think about a new loan! A refinance can be worth its cost many times over, factoring in the advantages that come, in addition to a lower interest rate.

Advantages of Refinancing

You may be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage loan. You also may have the option of pulling out some of the equity in your house by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build your home equity faster by switching to a shorter term loan.

Fees and Expenses

All of these advantages do cost something, though. You'll have to pay the same types of expenses and fees as with your existing mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might investigate paying points to reduce your interest rate. When you pay (on average) three percent of the loan amount initially, your savings for the term of the new loan can be great. We recommend that you consult a tax professional before acting on advice that the paid points may be deducted on your taxes.

Another thing about taxes is that once you lower your interest rate, it follows that you'll also be reducing the paid interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at (207) 571-8034.

Most people find that the monthly savings quickly outweigh the up-front cost of refinancing. We can help you explore your options, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (207) 571-8034 to get started.

Curious about refinancing? Call us at (207) 571-8034.